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BUSINESS AND CORRUPTION. TREFILOV AND SVIAZ-BANK

PART I

“For Russia every entrepreneur is valuable, even the smallest one.”

2008 certainly became a turning point for Trefilov. In that year, he lost everything: the business, the Russian and German partners, gone was his market position, as well as the trust of many people who worked with him. The myth created by Trefilov about liquidity and benefits of his "super profitable" assets was destroyed in a few months.

It is necessary to recall that Marta Holding’s debt burden was steadily growing year after year. Numerous sources reported this at the time, noting that the debt of "Marta" was overtaking its profits. Aside from attracting more credit, from 2005 Trefilov additionally issued three bonded loans in volume of 3.7 billion rubles.

Trefilov conducted risky and aggressive regional expansion by acquiring for the purpose of resale dozens of retailers across Russia. From 2005 to 2007 the markets really did experience a sharp increase in prices for commercial real estate, but this moment was of short duration. Trefilov did not have money of his own, so his business was almost completely dependent on the availability of buyers, favours of banks and steady growth of the markets.

The money was brought in at a high interest rate, from 20% and above. Later, in an interview with RBC on 28/08/13, Trefilov recognizes that his investments "being structured as loans at 20% was madness", but since 2005 he has chosen this path and could not seem to stop.

The reinvesting of funds took time, so Trefilov started increasing the debt burden. By securing mortgage loans for acquired commercial property with equipment located within them (including that which belonged to the German partner), Trefilov temporarily covered the shortfall in funds. Apparently, to do this Trefilov sometimes made "empty" transaction, acquiring unprofitable properties in small towns, just "for the sake of quantity". Market analysts repeatedly questioned this practice and remained skeptical about the prospects of such a development.

For a long time Trefilov was certainly saved by having such a business partner like REWE., who helped Trefilov with money since 2004. Having the "Letter of Intent" with the giant company, the businessman could always go to any bank. Furthermore, while acting within the terms of the contract, REWE, held two large deals in the 4 years of cooperation with Trefilov. As a result not only was Trefilov able to reinvest his funds, but he also created a positive reputation in the eyes of the investor community. Other buyers for his retail chains were non-existent.

At the same time, the businessman’s appetites grew, as well as his debts. Quickly dealing with the situation, the Germans decided not to change the proven long-term development strategies for the ideas of instant enrichment of our "new Russian bogatyr" and refused to risk, or for that matter trying to save the unmanageable businessman by practically paying his debts. Meanwhile the situation was continuing to develop and became more aggravating with every year: Trefilov’s partners, including those from the Russian side, also openly opposed his .

Since 2006 the ratio of debt to profit exceeded 7-11 times over, which was a critical indicator for the retail market. Many other market analysts and media talked about MARTA being on the verge of bankruptcy.

By 2007 the official debt amount by the Holding reached $ 550 million with revenue of $ 571 million. All of the year "MARTA" sought financial resources, to repay its existing credit obligations. To pay off old loans, new ones were made - the situation was becoming more dire.

Since the end of the same year, the bondholders of "Marta Finance" began to dispose of said bonds in mass. Trefilov almost fully repaid the second issue bond commitments, paying 1 billion rubles, and in February 2008 a new queue of creditors was already waiting in line. He had to buy 2/3 of third issue securities for 1.3 billion rubles.

There was no money left, and therefore he had to actually sell 35.7% of RTM company shares to his partner E. Vyrypaev. On the other hand RTM was not only a key asset for Trefilov, but also a diversified one as well. Namely - a part of “Grossmart” stores were not included as part of RTM, but rented the retail space from it. So when the shares were sold to Vyrypaev, he received the definitive right to determine the value of the rent.

Of course all this did not suit Trefilov, since he had other plans and expectations for this asset. From September 2007 he persistently tried to sell “Grossmart” commercial real estate network to REWE at a clearly inflated price. After the selling of shares to E. Vyrypaev, part of the “Grossmart” stores that belonged to RTM were passed to Trefilov on legal grounds.

Trying to climb out of the debt pit, which continued to grow deeper, Trefilov continued to risk and make fatal mistakes. Among them was a public scandal with Vyrypaev and subsequent legal actions initiated by Trefilov. The consequence of this were the collapse of share value for the OJSC (open joint-stock company) RTM, Trefilov’s bankruptcy and litigation that was known to be a lost cause for him.

The sale of shares in RTM led to the loss of the best commercial real estate MARTA had, after which REWE naturally lost all interest in the disadvantageous deal and in Trefilov himself. Strictly speaking there was nothing left to buy, as the remaining capital had loans attached to it or was plain unprofitable.

In the same year (2008) Trefilov hastily sold the remnants of his business and real estate: gave up control of the store chain PUR PUR, sold KIT Finance, laid down internet trade, packaging plant "Pagoda" bought by his top managers…

In 2008 the total debt of all affiliated structures owned by Trefilov came close to 1 billion dollars.

Five years later, in 2013 during an interview with the BBC, having apparently forgotten the facts of the case, Trefilov claimed he was the owner of a successful business, who did not have a motive "to steal one billion rubles from his own company, which was worth 45-50 billion rubles."

“There were some problems with debts…”

On May 22, 2008 a technical default was admitted on "MARTA" Holding bonds. The following day the money was "found", i.e. Trefilov was "rescued" by the then-friendly Sviaz-Bank. In the same month, on the website of the Moscow Arbitration Court, information was published about the 25 lawsuits filed in May 2008 by the creditor banks and suppliers of “MARTA”. The total sum of claims for May only was - $36,5 milloin.

Despite the obvious, Trefilov misled the banks by saying he will be clearing the settlements with them soon, June - July 2008. But the banks were adamant this time and did not withdraw the lawsuits.

In late summer, there was a second default: on August 4th coupon interest was not paid to investors in the amount of 155.4 million rubles. Two days later the decline continued – the CJSC (closed joint-stock company) "Marta Finance" failed to repay the presented for redemption papers worth 1.202 billion rubles. The third instance was with the sixth coupon on the bonds of the second issue for the amount of 60 million rubles, which happened in winter, December 8th 2008.

And he still needed to settle with the creditor banks.

According to credit obligations a substantial portion of the funds, received from Russian banks by providing false information (about the financial position of the borrower), was required to be returned in the second half of 2008. Moreover, the term payments on some of the loans were already previously postponed.

For example, the Trade Finance Bank provided Trefilov with a right of repayment deferred for more than a year, from 2007 to 2008. The loan itself was received on 28th September 2006 with a repayment date being 28th September 2007. The amount of the loan was twenty-five million rubles.

The loan was not returned by Trefilov in due time, but instead (again) documents were provided containing false information for collateral purposes. The documents talked of household appliances and accessories, in an alleged trade turnover by the holding, worth 21,112,000 rubles.

Additionally, by entering into a supplementary agreement with one of the "daughters" of "MARTA", LLC "Interline", preferential credit conditions (a delay) were obtained, to return the already received credit for the period until 28th September 2008.

The loan still has not been returned to the “TFB” bank. The amount of damages sums up to 25 million rubles. What follows are some more relevant figures.

Amongst the affected by the actions of Trefilov:

Sberbank (Tverskoye Branch) - damages amounted to 86 million rubles.

RGS Bank - damages amounted to 140 million rubles. Loans to these organizations were to be repaid no later than August 1st 2008 and September 5th 2008, respectively.

Total number of such episodes in the case of Trefilov is 16. The overall (official) amount for damages caused to Russian banks is 1.9 billion rubles.

Recently (2013) Trefilov connected the bankruptcy of his holding to the global financial crisis. He repeats in the media that the banks (because of the crisis) "demanded early repayment of loans", to which he was not ready. Obviously, Trefilov is manipulating the facts.

All financial "pyramid schemes", as it is known, share a common trait - in contrast to their "stony ancestors", they always collapse. The same fate befell "MARTA", which, despite favorable conditions for economic development and actual luck, could not exist in conditions of endless risks, debts and expenses, which were used as "tools" by its creator - Trefilov.

The question of whether to consider such actions as a valuable enterprise for the country or something else entirely (?) is perhaps best left to the competent authorities. One thing is clear though – Trefilov’s activities from 2002 to 2008 caused major material damage to the state. Furthermore, thousands of people were left without work, having accumulated from their time working in the holding: company debt, damaged credit history and tainted employment records.

PART III

Perhaps that point is debatable. But admittedly, Trefilov really had a certain entrepreneurial gift; at least for his own purposes George attracted funds masterfully. And not just by taking out securities on commercial equipment or hiding behind the big names of his business partners, whom he openly used where necessary.

The current "fighter against corruption and illegitimacy" and fresh "political" exile, a victim of raiders "afraid to return to Russia, because of possible unfairness to him", clearly knew how to "negotiate". He definitely could get huge amounts of money on absolutely fantastic conditions. Not surprisingly, being in such a "fairy tale" and having grown so accustomed to easily receiving money, he could have decided that the money doesn’t have to be returned.

According to the default judgment of the Tverskoy court of Moscow on July 28th 2009, a year earlier, when Trefilov’s business regularly “agonized”, the following happened.

May 22nd 2008, Mr. Trefilov together with his wife, Ms. Trefilova, and two trustees, who chose to become guarantors under the loan agreement, signed with OJSC "Sviaz-Bank" the Credit agreement number 1362/2008, under which the Bank granted to the Borrower Trefilov a loan of 700 000 000 (seven million rubles 00 kopecks) at a 17.5% APR for consumer purposes with a final repayment term up to August 1st 2008.

As security for the fulfillment of the obligations under the Credit Agreement three agreements were signed with guarantors, Y.B. Trefilova, S.A. Poretskiy and A.P. Tkachenko, as well as two Pledge Agreements for two... vehicles. The collateral for 700 million rubles became 2 automobiles, a BMW 7601LI and a Chevrolet Express, priced according to the collateral agreements at 1,364,930 (one million three hundred sixty-four thousand nine hundred and thirty rubles) and 1,442,563 (one million four hundred forty two thousand five hundred sixty-three rubles) respectively. It is also known that, among other things, the Bank was offered Trefilov’s Ferrari car. The guarantee was given to the Sviaz Bank by the well-known then company belonging to Trefilov - LLC "Elekskor", which declared bankruptcy a mere 1.5 months after the events described. And...That is all.

Could a common man do so? No, of course! Not every entrepreneur (!) could do so. Be proud country with your "best people"! Further the following is known:

After issuing to borrower Trefilov (note - physical and not legal entity) for a two month period an "urgent needs" seven million rubles, not only did Sviaz-Bank not get it back, but also they have not "seen" any interest or penalties or fines. And only after waiting 9 months, during which they have repeatedly offered Trefilov to settle, in 2009 Sviaz-Bank went to court.

The same default judgment shows that: Trefilov has not responded to any of repeatedly received letters requesting to return the amount loaned, the debt was not repaid and no consents or objections were made by Trefilov to the claims of the bank. Guarantors also failed to fulfill their legal obligations (according to available information, other than the spouse, Ms. Trefilova, they were drivers of the businessman).

Neither Trefilov, who was properly informed (as evidenced by receipts), nor his legal representatives, nor any other defendants in the case have shown up in court. Evidence of proper conduct during the period of the agreement are absent, or any evidence of circumstances preventing him from adhering to the requests of the bank (apparently the raiders story was not yet "born").

So simple it turned out to be - even without lawyers, without explanations, anxiety and self-doubt of their own "legitimacy", the process was over for the Trefilov family on July 28th 2009.

Russian citizen and a multimillionaire businessman, who, in his words, "tried unsuccessfully to intervene" in the workings of the government and criticized "that, which in his opinion, was wrong" in the economic structure of the country. The same man has completely ignored his own legal duties and showed great contempt for the court.

"He still was here..."

P.S. But what happened to the money? What of the court? After reviewing all the circumstances and calculating the sum of the damages, the court granted the plaintiff's claims and decreed: